U.S. SEC sets March 2015 date for new extractives rules

Wednesday, 28 May 2014 02:45 GMT

The U.S. SEC's first attempt at writing rules for extractive disclosure was thrown out last July by a U.S. court

By Stella Dawson

WASHINGTON, May 27 (Thomson Reuters Foundation) - The U.S. Securities and Exchange Commission plans to complete by March next year its second attempt at writing new rules for oil, gas and mining companies to disclose what they pay governments for their natural resources.

Its first attempt was thrown out last July by a U.S. District Court, which ruled in support of businesses that the SEC had failed to justify why companies must publicly disclose so much information on royalties, leases and other payments.

The new timetable was included in the SEC's latest update to its priorities for the year ahead. It would bring the United States roughly into line with the European Union states, which must introduce their disclosure rules for extractive industries by July 2015.

Human rights and groups that advocate corporate transparency are pressing hard for more disclosure by oil, gas and mining companies on what they pay governments as a way to combat corruption in resource-rich countries.

Oil companies have argued against the mandatory disclosure rules, required under Section 1504 of the 2010 Dodd-Frank U.S. financial reform act. Instead they prefer voluntary agreements with countries.

In the United States, the American Petroleum Institute and the U.S. Chamber of Commerce filed a lawsuit in 2012 to block the implementation of the SEC rules, saying they would cost billions of dollars, violate contract terms in some countries and be anti-competitive.

A court partially agreed and sent the SEC rules back for a rewrite, saying the agency had misread the statute by requiring companies to publish detailed payments broken down by project. The court also said the SEC failed to adequately explain why it did not allow for exemptions in cases where a government forbade disclosing the contents of a contract.

The SEC now must try again. The oil industry has proposed that SEC aggregate their filings into a report, while human rights groups say that the global trend is clearly for more detailed disclosure, so the SEC should re-issue its original rule with a few tweaks and better explanations.

"We want a rule as soon as possible but it needs to be the right rule and in line with the laws passed in the EU and Norway over the last year," said Joseph Williams, a senior officer at Revenue Watch Institute, a resource disclosure organization.

"This will give citizens and investors the information they need, but will also provide a level playing field for companies in different jurisdictions," he said.

(Reporting By Stella Dawson; Editing by Ken Wills)

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